Wether-spoons are rarely out of the news. As they spread across the country into smaller and smaller towns, it seems like everyone has an opinion, with the latest scheme to come under the microscope being the conversion of the Whit Hart in Downham to a Wetherspoons outlet. Yet all is not well in the world of Wetherspoon. The latest results for the group show a 25% fall in profit over the last year to 26th July, with then group only making £58.7 million despite a rise in like for like sales of 3.3%. Outspoken founder, Tim Martin knows exactly where the blame lies. First there is the disparity in price between the supermarket prices and those in pubs. One particular gripe is the way VAT is levied, with most of supermarket food being exempt, but food eaten in a pub attracting VAT at a rate of 20%, a situation which it is claimed allows supermarkets to subsidise alcohol sales. I can see his point, and indeed some countries have a lower VAT rate on food purchased in bars and restaurants in order to help to encourage small businesses, which therefore will increase employment and cut the welfare budget. However there is a certain logic to the present system in that everyone has to eat, and therefore VAT is not charged on an essential item such as food. On the other hand, everyone does not have to eat out and steak night down the Lattice House could be considered a luxury, for which there is little reason to exempt from VAT. A couple of years ago Brandon Lewis, then Parliamentary under Secretary of State at the Department for Communities and Local Government spoke to CAMRA and categorically stated that any reduction in VAT for pubs was not going to happen. Still, things have changed and we can all wonder what Jeremy will do if he goes on from being the Labour Party leader to a position of real power.
The second gripe Tim Martin expressed was the chancellor’s plan to increase the minimum wage. Many of his staff are on a zero hours contract paying around the legal minimum and it is the view of a landlord friend of mine that they earn every penny of their pay. There are few bar stools in Wetherspoon pubs to discourage the punters chatting to the staff, hopefully giving them time to scoot around and clear tables between serving the customers. Tim claims that it costs the average pub about 85p in wages to serve a pint compared with about 10p in a supermarket. Inevitably under his logic, a rise in the minimum wage will result in higher overheads and possible pub closures, predominantly in the poorer areas of the country. I feel ambivalent about this. Some employees like the flexibility of the zero hours contracts and one of the staff down at the local Wetherspoons was telling me how she can earn more than her salaried boss by putting in long hours.. However many people earning low wages have their income topped up by benefits of various kinds and it seems to me that it is wrong that staff should be so low paid that they have to be subsidised by the state, whilst the companies who employ them bank millions of pounds of profit. It is strange that when benefits are paid to individuals, some elements of the media are keen to portray the recipients as scroungers, whilst if the benefits are supporting company profits by making it possible to employ people at a non-living wage, silence reigns.